1. Field of the Invention
The invention relates generally to a management system for investments and, more particularly, to a system and method that track performance of investments that are kept in one or more accounts with a computer that accesses investment records from the account databases over a computer network, such as the Internet, and generates comprehensive accounting and financial reports of security investment portfolios.
2. Description of the Related Art
On-line trading has increased at a rapid pace in recent years due in large measure to the ever increasing popularity of the Internet. On the investor's side, the popularity of on-line trading has come in large part from lower commissions, easy access to research and news information, real-time quote services, real-time confirmation of trading, and the ability to view such information in a graphic or tabular format upon user demand.
On the services side, more financial institutions have begun offering on-line trading services to meet the increased demand from investors. Managing investor accounts on-line is attractive to financial institutions for several reasons. First, on-line trading requires significantly less manpower to operate than traditional investment services provided through telephone or in person. This is because many of the tasks that were previously handled by brokers and data entry personnel can be carried out automatically by a computer. In essence, the investor becomes the broker and the data entry person, as it is the investor who makes a decision on a trade based on the research that he or she has conducted and remotely enters the information for executing the trade. Second, financial institutions have discovered that the ease of on-line trading invites more trading. Therefore, whatever discounts in commissions that are offered to investors is made up in part by the increased trading volume.
It is common today for an investor to have multiple trading accounts. An investor may have one trading account with a traditional broker, one with a favorite on-line broker, and another with an on-line broker offering the lowest commission on trades. The investor typically receives a monthly statement from each of these brokers. The monthly statement provides a summary of the trading activity for that month and a snapshot of the investments currently held. If the account is accessible on-line, the account holder may retrieve this and other information over the Internet, such as a history of transactions, investments currently held, and a portfolio summary indicating cash available, amount borrowed on margin, value of the investments currently held, and net portfolio value.
To keep track of all of his or her investments collectively, the investor will need to purchase an investment tracking software or set up an account at an investment management web site. These forms of tracking investments, however, are very limiting. The investment tracking software that is available are sometimes very limiting in that it is not plugged into a database of current stock prices and is thus unable to update the status of the investment portfolio in real-time. The investment management web site is limiting in that it keeps track of only the investments that are currently held and not sold positions. Once an investment is sold or otherwise closed out, that investment is deleted from the portfolio. As a result, the investor is unable to track the performance of all of his or her investments, past and present.
In general, the investment portfolio tracking systems that are currently available provide only the basic information about investments. For example, most systems are available to provide a gross rate of return on a stock investment based on that stock's current price and the purchase price, but they do not take into account other factors that are relevant in computing a more representative rate of return, e.g., the holding period, the commissions that were paid, the amount of cash that was invested for that investment, the tax liability if that investment was closed out, etc.
Therefore, investors are currently unable to track their investment portfolio in a meaningful and useful way. Moreover, if they have multiple accounts, they are unable to track the performance of their investments collectively, unless they undergo the cumbersome process of entering their investment transactions into a software or web site database. Even so, they would still be unclear about the true collective performance of their investment portfolios, because they would receive only the basic performance information which does not take into account all of the factors that are necessary to give a meaningful rate of return on the money invested.
There currently is no standardization of accounting and financial presentation of investment portfolios, which gives pertinent, easy to understand information to investors. Further, there currently is no financial service or software that tracks the performance and current real net worth of a portfolio of investments after commissions, other costs, margin interest and taxes. An investor desiring such information needs to perform the analysis using a spreadsheet, but this way of generating tracking investments is prone to errors, time consuming, and virtually impossible to do for an extended period of time.